Rural to urban migration is an integral part of structural transformation and the development process, but there is little evidence on how out-migration transforms rural labor markets. Emigration could benefit landless village residents by reducing labor competition, or conversely, reduce productivity if skilled workers leave.

The study offers to subsidise transport costs for a large number of potential seasonal migrants in Bangladesh, randomly varying saturation of offers across villages. It finds that seasonal migration subsidies not only generate large direct benefits, but also indirect spillover benefits by creating slack in the village-of-origin labor market during the lean season. Offering migration subsidies to some households indirectly benefits others mostly by making it easier for them to also migrate.

Shyamal Chowdhury, University of Sydney, visiting the Research School of Economics at ANU.